Jobless rate falls to 3.8%

Md. adds 36,400 jobs in 2006, matching number created in 2005

Despite the drag of both a housing slump and a shrinking supply of unemployed workers to hire, Maryland's economy produced nearly as many jobs last year as it did the year before, according to new numbers from the federal government. The unemployment rate fell to a low 3.8 percent.

Employers added 36,400 jobs last year, off by 500 from 2005, according to Labor Department statistics released yesterday. The jobless rate - which improved from 4.1 percent in 2005 - was well below the nation's 4.6 percent rate.

The numbers are preliminary, which means they could be changed later as the government collects more information. They are not adjusted for seasonal variations because they are annual.

The state's performance pales next to the tech-bubble years of the late 1990s and 2000, when sometimes over-eager employers added an average of 60,000 jobs annually. One local economist said the state's economy is afflicted with "a case of the blahs," though others said they thought it had a good showing last year - considering what it faced.

"The fact that job creation remained roughly at the same pace as 2005 is a noteworthy accomplishment," said Baltimore economist Anirban Basu, head of Sage Policy Group Inc. "The labor market in 2006 was even tighter than the labor market in 2005, making it more difficult for employers to fill open positions. ... The more important issue, I think, is that 2006 was the year of the slowing housing market, and one would have thought ... that this by itself would have resulted in significantly slower job growth."

The preliminary data also suggest that last year was the first since 2000 that Baltimore City saw a job gain. But it was so slim that later refinements by the government could reverse the figure. The statistics show the city adding 400 jobs for a total of about 372,000 on average last year.

From the recessionary year of 2001 through 2005, the city lost more than 36,000 jobs - as many as Maryland added in 2006.

"It's really remarkable how such a small amount of job creation has become associated with such a profound level of commercial development," said Basu, referring to the city's recent construction boom. He attributes it to the need to replace old office space with new, which doesn't necessarily add jobs in the long term.

M.J. "Jay" Brodie, president of the Baltimore Development Corp., the city's economic development arm, said he's noticing that developers and others are unusually optimistic about the city's future. "The confidence level that we've seen in the last couple years is the highest in my long career ... in the city of Baltimore, ever," Brodie said. "That includes the best years of the Schaefer era, which were very good."

Richard P. Clinch, director of economic research at the University of Baltimore's Jacob France Institute, said the city seems to have turned a corner. Also, advocates for entry-level workers in the city, a group hit hard by the 2001 recession, said they saw a decided improvement last year.

There's not the "frenzy" of hiring that there was in 2000, but "to me, this feels much more sustainable," said Phil Holmes, vice president of public policy and program development at Goodwill Industries of the Chesapeake in Baltimore, which assists those who want training and jobs.

Goodwill helped more than 1,400 people get work last year in Central Maryland and the Eastern Shore, the majority of whom live in Baltimore - a record for the group. Holmes expects even better days ahead because the military base restructuring will send thousands of jobs to the region in the near future, possibly beginning next year, and retiring baby boomers will leave openings that need to be filled. But those trends haven't picked up steam yet. Economists are divided on whether the state can expect the pace of job growth to improve this year.

Clinch thinks Maryland will see increases that match or exceed last year's - somewhere in the range of 35,000 to 40,000 additional jobs. Daraius Irani, director of applied economics at Towson University's RESI and the economist who said the state's economy had the blahs, said he expects about the same numbers as last year. Basu said he is less optimistic, predicting a 30,000-job increase.

There are signs that job growth might be picking up. Employers added 7,500 jobs in December, the second-best monthly performance last year, according to the Labor Department's seasonally adjusted numbers.

Businesses would add more if they could, said Quincie Rivers, an area vice president at staffing firm Adecco. An "extremely tight" pool of available workers is slowing growth, she said. Companies, to fill new jobs and keep current workers from jumping ship, are improving training and offering flexible work options.

"I've never seen it so competitive," said Rivers, who has been in the staffing business for 18 years.

The educational and health services sector added the most jobs in Maryland last year, with 10,800 - double the number in 2005. Professional and business services, another engine of the local economy, grew by 8,000 jobs, about a third less than in 2005.

Brisk commercial development overcame homebuilder layoffs to enable the construction sector to grow by 3,000 jobs last year. But the sector created more than twice as many in 2005, when the housing boom was under way.

Leisure and hospitality added 5,600 jobs, about the same as the previous year.

The lone black eye: manufacturing, which shed 2,800 jobs. The state lost a fifth of its already shrunken manufacturing employment during the six-year stretch ending in December, said Charles W. McMillion, president and chief economist of MBG Information Services in Washington.